As a digital-age banking customer, you must have come across the terms NEFT, RTGS, and IMPS. Of course, all these are associated with online funds transfer. However, have you ever wondered what these terms individually mean, the advantages and disadvantages of each one, how they are different from each other, and how to use them? If you haven’t already, this blog from Arth Shikshan answers it before you do.
What is NEFT?
Introduced by RBI, NEFT stands for National Electronic Funds Transfer. It enables quick money transfer anywhere across India. However, to facilitate fund transfer through NEFT, the branches of the banks involved must be NEFT-enabled. Let us now look at some of the pros and cons of NEFT.
Advantages and Disadvantages of NEFT
Advantages of NEFT
- Near real-time funds transfer
- Secure funds settlement
- Positive credit confirmation to beneficiary account to the remitter through email/ SMS
- Available throughout the year, 24/7, and seven days a week
Disadvantages of NEFT
- The method is secure, but as an online fund transfer system, data remains vulnerable to hacking.
- People unaware of online transfer systems may be unable to transfer funds through NEFT
How to use NEFT for online funds transfer?
Let us now see how to do NEFT transfer in ten simple steps.
1. Sign-in into the internet banking page of your bank1. Sign-in into the internet banking page of your bank
2. On the home screen, click on the Fund Transfer option
3. Select the NEFT option
4. Select the proper beneficiary from the list
5. If the beneficiary isn’t already added, click on the Add Beneficiary button.
6. Enter the required details of the beneficiary, verify them, and confirm
7. You receive a four-digit OTP on your registered mobile number to confirm the addition of the new beneficiary
8. Wait until the beneficiary is added to the account
9. Now, choose the beneficiary and select the bank account from which the money will be transferred\
10. Enter the right amount and click on the Confirm button to initiate the NEFT transfer
What is RTGS?
Launched in 2004 by the RBI, RTGS is the short form of Real-Time Gross Settlement. Real-time enables continuous real-time fund transfers, which refers to processing instructions at the moment the bank receives them. On the other hand, gross settlement refers to handling fund transfer instructions on an instruction by instruction basis.
Advantages and Disadvantages of RTGS
Advantages of RTGS
- No maximum limit for RTGS transfers
- All-day availability of funds transfer
- Enablement of a real-time fund transfer through the bank branch
- Elimination of the need to issue a demand draft or a physical cheque
- No fee or charges for the transfer
- Money can be transferred anytime and from anywhere
Disadvantages of RTGS
- The minimum amount to do RTGS is INR 2 lac with no upper limit
- It does not allow to track the transaction to its customers
How to do an RTGS transfer?
Let us look at the steps to do RTGS transfer online.
1. Sign in to the internet banking of your bank
2. On the home page of the website, click on Fund Transfer
3. Select the beneficiary option
4. Choose the RTGS option from the inter-bank payment options available
5. Add a beneficiary while providing the required details
6. Click on Accept Terms and Conditions and confirm
7. You will receive a high-security password to your mobile number
8. Enter the password to authorize the beneficiary
9. The beneficiary addition takes around 30 minutes to a few hours
10. Once the beneficiary is added, go to Fund Transfer/ Payment Transfer tab and click on RTGS
11. Enter the required amount and select the appropriate beneficiary
12. Click on Accept Terms and Conditions and confirm to process the transfer
What is IMPS?
IMPS is the short form of Immediate Payment Service. It was introduced by the RBI and the NPCI and initiated by the latter in 2010 through a pilot project with four major banks. However, over the years, it has grown to be used by over 150 banks throughout the country. It enables instant funds to transfer through laptop and mobile and is available at all times. Banks charge a nominal fee for IMPS transfers.
Advantages and Disadvantages of IMPS Transfer
Advantages of IMPS Transfer
- vailable 24/7
- Instant funds transfer
- IMPS transfer is available online
- Availability of intrabank and interbank transfer
- No minimum amount on transfer
- Transfer is available SMS, mobile, net banking, ATM, etc.
Disadvantages of IMPS Transfer
- There’s a limit on the maximum transaction
How to do an IMPS transfer?
Here a step-by-step process of IMPS transfer.
1. Log in to your bank’s net banking portal or website.
2. Go to the Funds Transfer option.
3. Enter the recipient’s MMID and mobile number. However, you can also enter the account number of Aadhar or the IFSC number.
4. Enter the transfer amount
5. Enter your PIN to authenticate the transfer request
6. You and the recipient receive SMS confirmation on the successful transfer of the funds.
Online banking has revolutionized banking, and RTGS, IMPS, and NEFT have played an instrumental role in transforming banking in terms of pace and convenience. Arth Shikshan hopes you got enough basic information about NEFT, RTGS, and IMPS through this blog. Keep following this space for more insights on financial literacy.